Mail Stop 3628
April 28, 2006
By Facsimile (213.621.5070) and U.S. Mail
Brian J. McCarthy, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, CA 90071
Re: Inter-Tel, Inc.
Preliminary Proxy Statement on Schedule 14A
Filed April 21, 2006 by Steven G. Mihaylo and Summit Growth
Management LLC
File No. 000-10211
Dear Mr. McCarthy:
We have reviewed the filing and have the following comments.
Where indicated, we think you should revise your document in
response to these comments. If you disagree, we will consider your
explanation as to why a comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation. In some of our comments, we may ask you to provide us
with supplemental information so we may better understand your
disclosure. After reviewing this information, we may or may not
raise additional comments.
Please understand that the purpose of our review process is
to assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of our review. Feel free to call us at the telephone numbers listed
at the end of this letter.
Schedule 13D/A filed April 21, 2006
1. We note that the statements in the last paragraph of Item 4
that Mr. Mihaylo has filed and intends to mail a "preliminary"
proxy statement in connection with the solicitation. Please advise
us with regard to his intent in connection with a definitive proxy
statement.
Schedule 14A
2. We note disclosure on page 4 of your discussions and possible
arrangement with Vector Capital to pursue jointly an acquisition
of Inter-Tel. What consideration was given to whether Vector
Capital may be a participant in the solicitation, as defined in
Instruction 3 to Item 4 of Schedule 14A? In this regard, Item 5(b)1)
of Schedule 14A requires a description of the interests of any
participants in the solicitation and details the disclosure required
for each participant.
3. We note you refer security holders to information that you are
required to provide and will be contained in Inter-Tel`s proxy
statement for the 2006 Annual Meeting. We presume that you are
relying upon Rule 14a-5(c) to refer to this information; if so,
please note that we believe that reliance upon Rule 14a-5(c)
before Inter-Tel distributes the information to security holders
would be inappropriate. Alternatively, if you determine to
disseminate your proxy statement prior to the distribution of the
company`s proxy statement, you must undertake to provide the omitted
information to security holders. Please advise as to your intent in
this regard.
4. We note statements throughout your materials in which you
assert that you believe that a sale "is the best path forward" for
security holders and will "maximize the value of [security holder`s]
investment." Further, you state that you are prepared to pay a
"meaningful premium" and that a cooperative process will enable
you to pay "the best price." Please provide support for these
statements and quantify any analyses performed by the participants
or otherwise to support these statements. To the extent any such
analyses have not been performed, so state.
Reasons for the Solicitation; Background, page 3
5. We note your statements on page 8 that the company`s public
disclosures have been "misleading" and that the company is
"attempting to impede a transaction that will maximize value for
shareholders." Such statements imply that the Inter-Tel Board is
failing to fulfill its fiduciary duties. You must avoid
statements that directly or indirectly impugn character, integrity
or personal reputation or make charges of illegal or immoral conduct
without factual foundation. Refer to Rule 14a-9.
Quorum and Voting, page 10
6. We note that you have only nominated three persons for election
and that the Inter-Tel Board consists of eights director seats.
We note further that you have not sought to "fill out" the board by
seeking authority, pursuant to Rule 14a-4(d), to vote for nominees
named in the company`s proxy statement. It thus appears that
security holders who follow the instructions included in these
materials will be disfranchised insofar as they will not be
permitted to vote on five of the eight board positions. Please
revise the blue proxy card to clearly state that by executing and
returning the card, security holders are unable to vote on five board
seats.
7. Clarify how shareholders are to indicate on the proxy card that
they intend to cumulate votes.
Election of Directors, page 12
8. Please expand your disclosure here to state that there is no
assurance that the company`s nominees will serve if elected with
any of the Mihaylo Nominees.
9. Please revise the last sentence of this subsection to state
clearly that, if elected, the Mihaylo Nominees` fiduciary duties
to the Inter-Tel security holders may prevent them from acting in
accordance with the views and wishes of the filing persons.
The Reincorporation Resolution, page 13
10. Each statement or assertion of opinion or belief must be
clearly characterized as such, and a reasonable factual basis must
exist for each such opinion or belief. Support for opinions or
beliefs should be self-evident, disclosed in the proxy statement
or provided to the staff on a supplemental basis. In this regard,
we note your disclosure in the first sentence on page 14 that the
company "prospered" as an Arizona corporation for over 36 years.
11. Your statements in the fourth and fifth paragraphs on page 14
imply that the Inter-Tel Board`s motivation for proposing the
Reincorporation Resolution is more to "benefit the members of the
Inter-Tel Board than the Inter-Tel shareholders." We also note
your assertions in the last paragraph on page 15 that the Inter-Tel
Board is "`piling on` anti-takeover defenses" and in the last sentence
of this section that the Board is "providing additional benefits to
itself" and "adopting provisions that could discourage offers to
acquire Inter-Tel." Such assertions imply that the Board is more
interested in remaining directors that in fulfilling their
fiduciary duties. You must avoid statements that directly or
indirectly impugn character, integrity or personal reputation or
make charges of illegal or immoral conduct without factual foundation.
Refer to Rule 14a-9.
The Anti-Takeover Resolution, page 16
12. We refer you to your disclosure in the first paragraph on page
17. Please describe in greater detail the "appropriate
circumstances" under which Mr. Mihaylo may submit an acquisition
proposal to the vote of the security holders.
13. The implication of your disclosure in the penultimate
paragraph on page 17 is that the Board is more interested in
"protect[ing] their best interests" than in fulfilling their fiduciary
duties. This implication is heightened by your assertions in the first
paragraph on page 17 that the Board is attempting "to create an
uneven playing field" and in the penultimate paragraph on page 17
that the Board`s deed is "a thinly-veiled action" directed at Mr.
Mihaylo. You must avoid statements that directly or indirectly
impugn character, integrity or personal reputation or make charges
of illegal or immoral conduct without factual foundation. Refer to
Rule 14a-9.
The Repeal the Bylaw Amendments Resolutions, page 18
14. Please expand your disclosure to explain in greater detail the
general effects, including potential negative effects to the
security holders, of adopting these amendments to the company`s
bylaws. Refer to Item 19 of Schedule 14A.
The Unanimous Vote Resolution, page 19
15. It appears that the proposed amendment as currently drafted is
rather broad, as arguably any amendment to the Bylaws could have
an anti-takeover effect. Expand your disclosure to describe briefly
the factors that may be considered when determining whether a proposed
amendment to the Bylaws has an anti-takeover effect.
Information About Participants in the Proxy Solicitation, page 21
16. Please revise your disclosure in the second paragraph on page
21 that Summit "may be deemed to be a `participant`" to state clearly
that Summit is in fact a participant in the solicitation.
17. Revise your disclosure to clearly identify the Mihaylo
Nominees as participants in the solicitation, as defined in
Instruction 3 to Item 4 of Schedule 14A.
Proxy Solicitation; Expenses, page 22
18. We note that you, MacKenzie and RBC may employ various methods
to solicit proxies, including mail, telephone, in person, facsimile,
email, Internet or other electronic means. Be advised that all
written soliciting materials, including any e-mails or scripts to
be used in soliciting proxies over the telephone or any other medium,
must be filed under the cover of Schedule 14A on the date of first
use. Refer to Rule 14a-6(b) and (c). Please confirm your
understanding.
19. Please tell us whether the solicitation of proxies via the
internet will include solicitations via internet chat rooms and
tell us which websites you plan to utilize.
Form of Proxy
20. Rule 14a-4(c)(3) contemplates the use of discretionary
authority only for matters unknown "a reasonable time before the
solicitation." Please revise your proxy card to clarify and place this
language in bold-face type.
21. It is unclear whether you plan to use discretionary authority
to adjourn the meeting to solicit additional proxies. In this
regard, adjournment of a meeting in order to solicit additional
proxies is not a matter incidental to the conduct of the meeting. See
Rule 14a-4(c)(7). To the extent that you wish to vote the proxies in
this way, you must provide a separate voting box on the proxy card so
shareholders may decide whether to grant a proxy to vote in favor
of adjournment for the solicitation of additional votes. Should you
add this box, revise the proxy statement to provide a separate section
discussing the reasons for this proposal and your voting
recommendation with respect to this proposal.
Proxy Soliciting Materials
22. Please address the comments contained in our letter dated
April 21, 2006 regarding the soliciting material filed pursuant to
Section 14a-12 by Mr. Mihaylo on April 10, 2006 and note that those
comments apply to any future soliciting or definitive additional materials.
Closing Information
Please amend the preliminary proxy statement in response to
these comments. Clearly and precisely mark the changes to the
preliminary proxy statement effected by the amendment, as required
by Rule 14a-6(h) and Rule 310 of Regulation S-T. We may have further
comments upon receipt of your amendment; therefore, please allow
adequate time after the filing of the amendment for further staff
review.
You should furnish a response letter with the amendment
keying your responses to our comment letter and providing any
supplemental information we have requested. You should transmit the
letter via EDGAR under the label "CORRESP." In the event that you
believe that compliance with any of the above comments is inappropriate,
provide a basis for such belief to the staff in the response letter.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be certain that they have provided all information investors require
for an informed decision. Since the filing persons are in possession
of all facts relating to a company`s disclosure, they are responsible
for the accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide, in writing, a statement from each of the filing persons
acknowledging that:
* the filing persons are responsible for the adequacy and accuracy
of the disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with respect to the filing; and
* the filing persons may not assert staff comments as a defense in
any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of Enforcement
has access to all information you provide to the staff of the Division
of Corporation Finance in our review of your filing or in response to
our comments on your filing.
Please direct any questions to me at (202) 551-3636 or, in
may absence, to Pam Carmody, Special Counsel, at (202) 551-3265.
You may also contact me via facsimile at (202) 772-9203. Please send
all correspondence to us at the following ZIP code: 20549-3628.
Very truly yours,
Ade K.Heyliger
Attorney-Advisor
Office of Mergers & Acquisitions